exv10w1






Exhibit 10.1









2008 SENIOR MANAGEMENT BONUS PLAN




PURPOSE




The 2008 Senior Management Bonus Plan (“2008 Bonus Plan”) was adopted to promote a shared sense of
responsibility for growth and financial success of Pixelworks, Inc. (the “Company”). The 2008
Bonus Plan is intended to motivate and reward Plan Participants for both Company and individual
performance.



DEFINITIONS




	 	 	 
	Plan Participant

	 	An employee of the Company or its subsidiaries,
approved by the Plan Administrator for
participation in the 2008 Bonus Plan.
	 
	 	 
	Target Bonus

	 	A percentage of base pay intended to be paid to
a Plan Participant if 100% of goals are
achieved. Detailed in Exhibit A.
	 
	 	 
	Bonus Payout

	 	The actual award to the Plan Participant.
	 
	 	 
	Plan Administrator

	 	The Company’s Board of Directors, acting
through its Compensation Committee. The
Committee may assign certain administrative
duties related to the 2008 Bonus Plan to
employees of the Company.
	 
	 	 
	Plan Year

	 	January 1, 2008 through December 31, 2008.
	 
	 	 
	Performance Measures and
Goals

	 	Specific financial and operational goals
approved by the Plan Administrator.
	 
	 	 
	Termination

	 	Cessation of employment for any reason except
retirement, death or disability.






PARTICIPATION




An employee must meet the following criteria to participate in the 2008 Bonus Plan:




	 	•	 	Be a regular full-time employee of the Company or any of its subsidiaries in a Director,
Principal Architect, Senior Director, Fellow, Chief Architect, Senior Fellow, Vice
President, Chief Financial Officer (“CFO”), President and/or Chief Executive Officer
(“CEO”), or equivalent position;
	 
	 	•	 	Be employed in an eligible position for a minimum of three months during the 2008
calendar year; and
	 
	 	•	 	Be actively employed by the Company on the day the bonus is approved by the Plan
Administrator, anticipated to be on a date in the first quarter of 2009. If employment is
terminated for any reason other than death, retirement or extended disability before the
Plan Administrator approves the bonus, the award shall be forfeited.










 









 











PERFORMANCE MEASURES AND GOALS




Two specific results must be achieved for any bonus amounts to be earned under the 2008 Bonus Plan:




	(1)	 	Revenue must meet or exceed a baseline target that has been established for the year ending
December 31, 2008.






	(2)	 	Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) must be positive in
all four quarters of 2008.





If both of the above results are achieved, bonuses will be calculated based on attainment of
specific goals related to each of the following measures:




	(1)	 	Revenue
	 
	 	 	The bonus, if any, related to this measure is based on the excess of actual revenue over the
baseline target, up to a specified maximum amount.
	 
	(2)	 	EBITDA
	 
	 	 	The bonus, if any, related to this measure is based on the excess of actual EBITDA over a
baseline target, up to a specified maximum amount.
	 
	(3)	 	Product Design Wins
	 
	 	 	The bonus, if any, related to this measure is based on the number of actual design wins achieved
as a percentage of a pre-determined quantity of qualifying design wins.
	 
	(4)	 	New Product Introductions
	 
	 	 	The bonus, if any, related to this measure is based on the number of actual new product
introductions achieved as a percentage of a pre-determined quantity of qualifying new product
introductions.





A weight is assigned to each of the four
Performance Measures above. The weight assigned
represents the maximum percentage of the Target Bonus that can be
earned through that Performance
Measure when all of the goals related to the Performance Measure are met. The weight assigned to
each of the four Performance Measures varies by Participant, based on the Plan Participant’s
position / function with the Company.



The specific goals for each of the four Performance Measures above are included in Appendix B. The
weight assigned to each of the Performance Measures is detailed in Appendix C.



DISCRETIONARY ELEMENT




The CEO has authority to recommend adjustments to Target Bonuses for individual performance,
extraordinary results or other uncommon factors. The Plan Administrator will approve discretionary
adjustments.



 









 





AWARD DISTRIBUTION




Bonus payouts will be based on actual salary paid during the Plan Year. Salary will include all
base pay, but will exclude any allowances, bonus payments or other compensation. Awards will be
distributed in the first quarter of 2009.



PRO-RATA AWARDS




If the Participant is promoted, demoted, or changes job responsibilities during the year, his/her
Target Bonus will be re-evaluated. If a change is warranted, it will be effective on the date of
the change in responsibilities for the balance of the year. All mid-year participation will be
paid on a pro-rata basis based on the percentage of time spent as a participant in the plan. If
the Participant is no longer in an eligible position due to a change in responsibilities or
demotion, any accrued bonus shall be forfeited.



All pro-rata awards will be determined by using the salary actually paid to the Participant during
the portion of the Plan Year that the individual was a Participant.



A Plan Participant may receive a pro-rata share of an award if he or she leaves the company during
the year due to death, retirement, or extended disability.



PLAN ADMINISTRATION AND AUTHORITIES




Bonus awards are not earned until approved by the Plan Administrator.



To provide for unusual occasions when business achievement is realized through little or no effort
on the part of the Plan Participants, the Plan Administrator reserves the right to declare such
business a “windfall.” Windfall business is subject to special treatment. Such treatment will be
handled at the sole discretion of the Plan Administrator.



Adjustments to performance may be made to provide for circumstances where performance is not
achieved due to factors beyond the control of the Participants. Such treatment will be handled at
the sole discretion of the Plan Administrator.



This Plan is not a contract of employment. It creates no rights for the Plan Participant to
continue employment with the Company for any length of time, nor does it create any rights for the
Plan Participant or any obligations on the part of the Company, other than those set forth herein.



The CEO shall have the authority to act as the final arbiter of any appeals, disputes or
interpretations emanating from the 2008 Bonus Plan except in matters related to his own
participation. All decisions, actions or interpretations by the CEO shall be final and conclusive
and binding on all parties. The Plan Administrator shall arbitrate any disputes related to the
CEO’s participation.



The Company reserves the right, in its sole discretion, to continue, amend, modify or terminate the
2008 Bonus Plan at any time.



 









 





PIXELWORKS, INC.

2008 SENIOR MANAGEMENT BONUS PLAN




APPENDIX A: TARGET BONUS PERCENTAGES




Following are the Target Bonus Percentages for the President, Chief Executive Officer, Chief
Financial Officer and other Vice Presidents:



	 	 	 
	Position(s)	 	Target Bonus
	President, 

Chief Executive Officer
	 	100%
	 	 	 
	Chief Financial Officer, 

Vice President
	 	50%






Following are the Target Bonus Percentages for other members of Senior Management:



[confidential]




 









 








PIXELWORKS, INC.

2008 SENIOR MANAGEMENT BONUS PLAN




APPENDIX B: PERFORMANCE MEASURES AND GOALS




[confidential]




 









 





PIXELWORKS, INC.

2008 SENIOR MANAGEMENT BONUS PLAN




APPENDIX C: PERFORMANCE MEASURES AND GOALS: WEIGHTING




The weighting of each of the four Performance Measures is as follows for the President, Chief
Executive Officer, Chief Financial Officer and other Vice Presidents:



	 	 	 
	Performance Measure	 	Weighting
	Revenue
	 	25%
	EBITDA
	 	25%
	Product Design Wins
	 	25%
	New Product Introductions
	 	25%






The weighting of each of the four Performance Measures is as follows for other members of Senior
Management:



[confidential]